Controversial D.C. Council Closer To Awarding Sole-Source Betting Contract To Intralot

With little discussion, but clear opposition, the D.C. Council on Tuesday voted to approve a measure that will allow it to bypass a bidding process in finding a sports betting vendor. The measure would also extend the contract of current D.C. Lottery vendor, Intralot, with no competition. The Committee of the Whole voted, 7-6, to pass Bill 23-25, the “Sports Wagering Procurement Practices Reform Exemption Act of 2019.”

According to testimony given by D.C. Lottery Executive Director Beth Bresnahan at a committee meeting last week, the Lottery should be able to get sports betting in the District of Columbia up and running within six months of signing a new contract with Intralot. If D.C. had decided to go with an open-bid process, the city CFO said it would take a minimum of 27 months.

When the D.C. Lottery’s online sports betting platform goes live, run by Intralot, it will be the only legal online sportsbook in town, with limited exceptions for D.C.-based sports venues, which will be allowed to have sportsbooks on-premises and within a two-block exclusivity zone with their chosen partners.

D.C. rushing decision ‘unnecessarily’

.@tweetelissa voted no during today's final vote on a bill allowing the District to bypass the competitive bidding process for a sports betting contract.

Background: https://t.co/9wyxkW1tEt https://t.co/6dc8OB7PIt

— CM Silverman Office (@CM_Silverman) February 5, 2019

The committee meeting last week was far more explosive than the full committee vote, during which the measure’s two most vocal opponents, At-Large Council Members David Grosso and Elissa Silverman, offered in-depth explanations for their opposition.

On Tuesday, both Grosso and Silverman went on record as opposed, but neither offered an amendment. Grosso said he opposes the measure because he’s “philosophically opposed to expanding gambling on the backs of the poor.” Silverman, who spent nearly an hour at the committee meeting trying to find a way to get her peers to negotiate a way to split the sports betting and lottery contracts, voiced her concerns, but did not bring forth the amendment on Tuesday.

“I think we are rushing this process unnecessarily,” Silverman said. “I think there is another way to do this without sole-sourcing the underlying lottery contract. We’re not only getting into the sports betting business, we are modernizing our lottery. I think there are both good governmental and practical purposes to separate these contracts.”

Silverman isn’t alone.  In a statement released after the vote, iDEA Growth’s John Pappas said, “The D.C. Council’s vote today to sole source the entire lottery and sports wagering contract hinders competition and transparency within the district. By voting to establish a monopoly — that cannot be challenged — the D.C. Council has stripped away any opportunity for healthy competition and oversight in the sports betting market. This action erodes public trust in the process and strengthens illegal offshore websites.”

And during a conference call last week, American Gaming Association Senior Vice President of Public Affairs Sara Slane referred to the D.C. Council as “FOMO.” She went on to say, “A huge motivating factor with adding gaming is wanting to be able to compete with nearby states. They don’t want to miss out on that opportunity.”

Both neighboring Virginia and Maryland have taken up sports betting in their respective state legislatures, but it does not appear that either will be positioned to license and regulate sports betting in 2019.

D.C. Sports betting decision a ‘sickening spectacle’

There are other questions swirling around the D.C. Council and its decision to be so aggressive in legalizing and launching sports betting. The City Paper ran a comprehensive story about ties between lobbyists favoring this bill and Council members in January.

As councilmembers decided how to establish sports betting, connected lobbyists swarmed the Wilson Building.https://t.co/TnDOyIBi69

— Washington City Paper (@wcp) January 24, 2019

And on Monday, a Washington Post story referred to the rush as a “sickening spectacle.” The writer, Colbert I. King, pointed out at least one of the myriad ties between lobbyists for the bill and a council member, as well as the potential folly of the city’s financial analysis, which suggests the city could potentially lose tens of millions of dollars with a later launch.

“The only thing base in this sports betting gamble is the concocted scheme to throw out competitive bidding in favor of a contractor who has an inside track,” King wrote. “Council approval of this sole-source bill would be a travesty.”

Now that the bill has been approved on first reading, it will be scheduled for a second reading and vote, likely later this month.